Why you should care

Because what’s good for people and the planet can still be good for the bottom line.

By Catherine Osborn

The Daily DoseOCT 22 2017

When French ecological shoe brand Veja wanted to design a new sport sole for its footwear, it consulted MateriaBrasil. Soon, fashion-forward women in Rio de Janeiro were cruising into business meetings in Veja Esplar high-tops — marketed as Vert in Brazil — with soles made of wild rubber harvested in the Amazonian state of Acre. Veja shoes, through the company’s own research, now also feature tilapia-skin uppers from the interior of São Paulo state.

Thanks to its success in connecting companies with the producers of fairly sourced raw materials from the country’s far reaches, Rio-based MateriaBrasil has become an anchor of Brazil’s growing B Corporation movement — one of the world’s largest outside the U.S. — which pledges to put society and the planet ahead of strictly making money. Brazil has 103 certified B Corps, more than 10 times the number since certification became possible in the country in 2013.

The movement here ranges from publicly traded cosmetics giant Natura to 4YOU2, a small, privately owned outfit that teaches English classes on São Paulo’s peripheries. “The B Corp community makes us excited to think about the possible social benefits of each new product,” says Pedro Ivo, whose company, Zebu, is developing organic paints that can serve as teaching tools about the life cycles of ingredients like cacao, açaí and achiote.

Leadership in innovation around sustainability has come from the private sector.

Alice Freitas, founder, Rede Asta

The rise of the Brazilian B Corp network is especially striking given revelations in the past three years of graft in the country’s largest firms. Federal anti-corruption probes have produced a seemingly endless parade of perp-walking billionaire executives. In sharp contrast, Brazil’s movement for responsible business is taking firmest root in small- and medium-size companies, influencing municipal governance and the local sustainability departments of multinationals. “We’re showing that Brazil has leadership to offer to the world in how business can be done,” says Tomás de Lara, co-director of Brazil’s B Corps coordinating body, Sistema B.

The American-based B Corp movement began in 2006 when an independent nonprofit advocacy organization called B Lab developed a lengthy questionnaire for companies that want to be certified as upholding social and environmental standards. The criteria include such factors as supply-chain ethics, board and executive diversity, recycling programs and salary ranges. In 2010 Maryland became the first state to allow companies to incorporate with charters based on defending social and environmental interest instead of shareholder profit alone. Since then, two-thirds of U.S. states have signed on.

Globally, more than 2,000 certified B Corps are found in 50 countries. But the explosion of the movement in a country like Brazil is unique. Australia, which also has an extractive economy that depends on raw materials, has 184 certified B Corp companies but is among the most advanced economies in the world. Among emerging economies, no nation comes close to Brazil — only six companies in China, three in India, five in South Africa and one in Indonesia are certified.

A post shared by WE ARE VERT (@vert_shoes) on Sep 25, 2015 at 6:23pm PDT

In Brazil, B Corps are a do-good empire that includes tech, communications and materials firms. Many were launched before B certification arrived in the country: In 2005, entrepreneurs Alice Freitas and Rachel Schettino founded Rede Asta, a network of artisans whose handmade work turns corporate residues into textiles, fashion and home decor. That same year, MateriaBrasil was born in a university industrial-design department, and in 2007 CBPak completed engineering on a new way to produce compostable cups from Brazilian manioc root. These companies have now become B certified, modifying their operations in everything from transparency to waste management. They are part of a growing ecosystem in Brazil that includes more than 570 social businesses, according to a 2017 analysis by Pipe consultancy.

The focus on better use of materials is significant in an economy that has always relied on natural resources, from sugar and coffee beginning in the colonial era to contemporary extractive industries like timber, mining and oil. The Workers’ Party, which was in power for most of the new millennium, “never emphasized a transition to a green economy, despite the country’s potential for wind, solar and green technologies,” says Araceli Ferreira, an environmental administration professor at the Federal University of Rio de Janeiro. Environmental initiatives from government and civil society in recent years have focused, with mixed results, on mitigating industrial harm. “Leadership in innovation around sustainability has come from the private sector,” says Freitas. One prime example: B Corp Amata manages more than 100,000 hectares of Brazilian forest to produce sustainable timber at a time when rising Brazilian deforestation has sounded international alarm bells.

A post shared by WE ARE VERT (@vert_shoes) on Aug 25, 2014 at 5:46pm PDT

A caveat to fanfare surrounding Brazil’s B Corps is the question of how much influence their practices really have on the behavior of major businesses. After all, companies once hailed as “national champions” are now also known for poor governance and environmental ruin. Petrobras executives stole billions over the past decade. A 2015 disaster at an open-pit iron ore mine co-owned by BHP Billiton and Vale killed 19 and drew more than $5 billion in fines. “Although laws requiring environmental impact studies exist in Brazil, slacking on compliance is the norm,” says Ferreira. Brazil’s tax structure continues to favor what she calls the “extractive economy.”

But Brazilian B Corp officer Tomás de Lara points out that some major firms, including the Brazilian divisions of Unilever and Danone, have invited B Corp specialists to consult on sustainability. Aerospace conglomerate Embraer worked with MateriaBrasil to identify sustainable materials for interiors in a line of its planes. And Rio’s previous mayor launched an initiative with Brazil’s B Corp team for local businesses to measure their social and environmental impact. Even a challenging environment for social business cannot stop determined B Corps, says De Lara: They make up part of the portfolio of Vox Capital, a Brazilian social impact venture capital firm, which has grown from $12 million to more than $38 million in five years.

Rede Asta’s Alice Freitas, who mediates contracts between bottom-of-the-pyramid seamstresses and large companies, is ready for Brazilian economic policy to undertake the “core business rethink” that is the backbone of the country’s social enterprise community. “The government’s economic development strategy must be intertwined with social inclusion and transitioning to a green economy.”